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1.1 Various Users of financial information need the information to make certain decisions. The table below contains internal and external users of financial data as well as their various uses of the data. However, the ‘users’ and ‘use’ columns are mixed up. You are required to prepare the correct number from the ‘users’ column with the correct letter from the ‘use’ column. E.g. if you feel ‘Owners’ is correctly matched with point ‘a’, then your answer would be 1.1.1–a)Follow this process for all eight of the users listed.

Users Use

1.1.1Owners a. Determine if the business can repay loans and interest. 1.1.2 Employees b. Competitor intelligence, to maintain competitive edge.1.1.3 Customers c. Determine if business can provide products over a long period of time.1.1.4 Competitors d. Determine if business can pay for goods purchased on credit1.1.5 Lenders e. Determine if the employer is able to provide stable employment and remuneration1.1.6 Government f. Determine if a business would be a good investment and to assess risk and return of an investment in business.1.1.7 Suppliers g. Determine how much tax and levies should be paid.1.1.8 Investment analysts h. Determine profitability and financial viability.

1.2 Name any three(3) production overheads which you would expect to find in a manufacturing organisation.

1.3 In business, owners and managers will often have to make ‘quick’ decisions under special ‘once off’ situations. Generally, these decisions happen within one year/ over the short term. Identify six (6) quick/short-term decisions which the logic of relevant costs can be applied to.

1.4 The manager of ‘Maple Furn Manufacturers’ has identified various items that are preventing his organisation from extending its sales, production and profits.

A management accountant friend has told him that those items would be regarded as limiting factors. Identify any three potential limiting factors and for each factor briefly discuss how they would arise and/or how you would manage or recommend reducing their effects on the business.

1.5 You are provided with the following costs which might be incurred in a service, trading or manufacturing entity. Indicate whether the cost involved would be variable, fixed or semi-variable (mixed). (Mark your chosen cost classification by marking an ‘X’ under the relevant column.)

Cost Behavior

Cost Variable Fixed Mixed1.5.1 Leather used to manufacture handbags.1.5.2 Cleaning materials used in a factory.1.5.3 Wages of assembly line workers paid per hour.1.5.4 Salary of the factory supervisor.1.5.5 Depreciation on factory plant and equipment. (straight line depreciation).1.5.6 Electrical costs of running machinery. 1.5.7 Rental of the factory warehouse.1.5.8 Rates and taxes on factory building.1.5.9 Manufacturing equipment leased at a flat rate per month plus an additional cost based on the number of hours it is operated each month. 1.5.10 Telephone costs (Including linerental).1.5.11 X-Ray film used in a medical centre. 1.5.12 Buns used to make burgers at a fast food outlet.1.5.13 Shipping costs of a manufacturer where no monthly contract exists i.e. the manufacturer is charged per product shipped.1.5.14 Advertising on a billboard where a monthly contract exists. 1.5.15 Commission paid to sales personnel.1.5.16 Insurance on the office building

problem2) COST ANALYSIS

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